Self-Directed IRA LLC, SS-4 questions, etc.

I recently opened a Self-Directed Traditional IRA account at a custodian
trust company in the mid-west, and I am in the process of having my IRA
funds from elsewhere rolled over into my Self-Directed IRA.

Then, I formed a Self-Directed IRA LLC (SDIRA LLC) a few days ago by doing
the LLC filing with the State, and I created the Operating Agreement from
samples I obtained which have the correct language regarding prohibited
transactions, etc.

The SDIRA LLC is a single-member LLC with the sole member being my
Self-Directed IRA ("XYZ Trust, custodian FBO John Q. Me IRA"). I, John Q.
Me, am the Manager of the SDIRA LLC but I am not a member.

Here's where I got lost: I needed to get an EIN from the IRS so I can open
the SDIRA LLC bank account. The IRS online Form SS-4 application is
confusing. I finally ended up just doing what I thought was best and filled
it out as a single-member LLC with the single member being XYZ Trust (on
Line 7a) and I used XYZ Trust's EIN (on Line 7b).

Did I do that correctly?

I had to do this in a hurry because I am buying a rental property in the
name of the SDIRA LLC and I needed to get everything set up now in order to
do the Agreement of Sale for the seller to sign (it's a private deal -- no
realtors are involved). I definitely am looking to find a CPA in my area
who knows about self-directed IRA's and self-directed IRA LLC's, how they
are handled taxwise, and can help me set everything up in QuickBooks for the
rental property, etc. (I am in Camden County, New Jersey in case anyone
knows a CPA they could suggest). Until I get the real help that I need with
this, I am trying a little more information about how the SDIRA LLC taxes
will be handled, etc.

As a single-member LLC, the SDIRA LLC is apparently considered to be a
disregarded entity. But, can the SDIRA LLC prepare an informational tax
return showing income, expenses, profits, losses, etc. If so, is it a
return that is done solely with the EIN that the IRS issued to the SDIRA
LLC?

And, what happens if the SDIRA LLC has unrelated business income and has to
pay taxes? Does the SDIRA LLC file a tax return and pay the taxes directly
to the IRS?

I know this is a lot to ask about. And, yes, I will be getting a
professional to help me. But any feedback in the meantime would be
appreciated.

Advertisements

I recently opened a Self-Directed Traditional IRA account at a custodian

Click to expand...

trust company in the mid-west, and I am in the process of having my IRA

Click to expand...

funds from elsewhere rolled over into my Self-Directed IRA.

Click to expand...

Then, I formed a Self-Directed IRA LLC (SDIRA LLC) a few days ago by
doing
the LLC filing with the State, and I created the Operating Agreement
from
samples I obtained which have the correct language regarding prohibited

Click to expand...

transactions, etc.

Click to expand...

The SDIRA LLC is a single-member LLC with the sole member being my
Self-Directed IRA ("XYZ Trust, custodian FBO John Q. Me
IRA"). I, John Q.
Me, am the Manager of the SDIRA LLC but I am not a member.

Click to expand...

Here's where I got lost: I needed to get an EIN from the IRS so I can
open
the SDIRA LLC bank account. The IRS online Form SS-4 application is
confusing. I finally ended up just doing what I thought was best and
filled
it out as a single-member LLC with the single member being XYZ Trust
(on
Line 7a) and I used XYZ Trust's EIN (on Line 7b).

Click to expand...

Did I do that correctly?

Click to expand...

I had to do this in a hurry because I am buying a rental property in
the
name of the SDIRA LLC and I needed to get everything set up now in
order to
do the Agreement of Sale for the seller to sign (it's a private deal --
no
realtors are involved). I definitely am looking to find a CPA in my
area
who knows about self-directed IRA's and self-directed IRA LLC's, how
they
are handled taxwise, and can help me set everything up in QuickBooks
for the
rental property, etc. (I am in Camden County, New Jersey in case
anyone
knows a CPA they could suggest). Until I get the real help that I need
with
this, I am trying a little more information about how the SDIRA LLC
taxes
will be handled, etc.

Click to expand...

As a single-member LLC, the SDIRA LLC is apparently considered to be a
disregarded entity. But, can the SDIRA LLC prepare an informational
tax
return showing income, expenses, profits, losses, etc. If so, is it a
return that is done solely with the EIN that the IRS issued to the
SDIRA
LLC?

Click to expand...

And, what happens if the SDIRA LLC has unrelated business income and
has to
pay taxes? Does the SDIRA LLC file a tax return and pay the taxes
directly
to the IRS?

Click to expand...

I know this is a lot to ask about. And, yes, I will be getting a
professional to help me. But any feedback in the meantime would be
appreciated.

Advertisements

I recently opened a Self-Directed Traditional IRA account at a custodian

Click to expand...

trust company in the mid-west, and I am in the process of having my IRA

Click to expand...

funds from elsewhere rolled over into my Self-Directed IRA.

Click to expand...

Then, I formed a Self-Directed IRA LLC (SDIRA LLC) a few days ago by
doing
the LLC filing with the State, and I created the Operating Agreement
from
samples I obtained which have the correct language regarding prohibited

Click to expand...

transactions, etc.

Click to expand...

The SDIRA LLC is a single-member LLC with the sole member being my
Self-Directed IRA ("XYZ Trust, custodian FBO John Q. Me
IRA"). I, John Q.
Me, am the Manager of the SDIRA LLC but I am not a member.

Click to expand...

Here's where I got lost: I needed to get an EIN from the IRS so I can
open
the SDIRA LLC bank account. The IRS online Form SS-4 application is
confusing. I finally ended up just doing what I thought was best and
filled
it out as a single-member LLC with the single member being XYZ Trust
(on
Line 7a) and I used XYZ Trust's EIN (on Line 7b).

Click to expand...

Did I do that correctly?

Click to expand...

I had to do this in a hurry because I am buying a rental property in
the
name of the SDIRA LLC and I needed to get everything set up now in
order to
do the Agreement of Sale for the seller to sign (it's a private deal --
no
realtors are involved). I definitely am looking to find a CPA in my
area
who knows about self-directed IRA's and self-directed IRA LLC's, how
they
are handled taxwise, and can help me set everything up in QuickBooks
for the
rental property, etc. (I am in Camden County, New Jersey in case
anyone
knows a CPA they could suggest). Until I get the real help that I need
with
this, I am trying a little more information about how the SDIRA LLC
taxes
will be handled, etc.

Click to expand...

As a single-member LLC, the SDIRA LLC is apparently considered to be a
disregarded entity. But, can the SDIRA LLC prepare an informational
tax
return showing income, expenses, profits, losses, etc. If so, is it a
return that is done solely with the EIN that the IRS issued to the
SDIRA
LLC?

Click to expand...

And, what happens if the SDIRA LLC has unrelated business income and
has to
pay taxes? Does the SDIRA LLC file a tax return and pay the taxes
directly
to the IRS?

Click to expand...

I know this is a lot to ask about. And, yes, I will be getting a
professional to help me. But any feedback in the meantime would be
appreciated.

I don't think I ever did receive a reply. I wasn't really expecting one
since it is an unusual type of situation, etc. But, I thought I would post
it anyway. I did eventually figure it out on my own, but it was long enough
ago that I am not sure how I did that.

More recently, I posted the part of the question again (probably under
another name) about how I was trying to find an accountant in my area who
knows about Self-Directed IRA's, SDIRA-LLC's, etc. I haven't found one yet
and I am still looking. I'm in Canden County, New Jersey (USA).

Are you doing something similar? Is that why you were asking if I received
any response?

You did it correctly. But you do not have to file tax for the LLC as LLC
is a pass through (disgarded entity). All profit/loss are passed to the
owner in this case the IRA account. I setup my own self directed IRA
about 3 years ago and invested in a single family home (currently on lease
option) and Made 5 short term loans.

I'm currently setting up one for my wife. But now the custodian wants a
self-directed IRA sepcific LLC operating agreement. This was not the case
three years ago. Are you willing to share where you found the sample LLC
agreemnet for self-directed IRA? I would be willing to share all my docs
as well. I'm looking for someone to bounce ideas. Thanks.

PHW

I recently opened a Self-Directed Traditional IRA account at a custodian

Click to expand...

trust company in the mid-west, and I am in the process of having my IRA

Click to expand...

funds from elsewhere rolled over into my Self-Directed IRA.

Click to expand...

Then, I formed a Self-Directed IRA LLC (SDIRA LLC) a few days ago by
doing
the LLC filing with the State, and I created the Operating Agreement
from
samples I obtained which have the correct language regarding prohibited

Click to expand...

transactions, etc.

Click to expand...

The SDIRA LLC is a single-member LLC with the sole member being my
Self-Directed IRA ("XYZ Trust, custodian FBO John Q. Me
IRA"). I, John Q.
Me, am the Manager of the SDIRA LLC but I am not a member.

Click to expand...

Here's where I got lost: I needed to get an EIN from the IRS so I can
open
the SDIRA LLC bank account. The IRS online Form SS-4 application is
confusing. I finally ended up just doing what I thought was best and
filled
it out as a single-member LLC with the single member being XYZ Trust
(on
Line 7a) and I used XYZ Trust's EIN (on Line 7b).

Click to expand...

Did I do that correctly?

Click to expand...

I had to do this in a hurry because I am buying a rental property in
the
name of the SDIRA LLC and I needed to get everything set up now in
order to
do the Agreement of Sale for the seller to sign (it's a private deal --
no
realtors are involved). I definitely am looking to find a CPA in my
area
who knows about self-directed IRA's and self-directed IRA LLC's, how
they
are handled taxwise, and can help me set everything up in QuickBooks
for the
rental property, etc. (I am in Camden County, New Jersey in case
anyone
knows a CPA they could suggest). Until I get the real help that I need
with
this, I am trying a little more information about how the SDIRA LLC
taxes
will be handled, etc.

Click to expand...

As a single-member LLC, the SDIRA LLC is apparently considered to be a
disregarded entity. But, can the SDIRA LLC prepare an informational
tax
return showing income, expenses, profits, losses, etc. If so, is it a
return that is done solely with the EIN that the IRS issued to the
SDIRA
LLC?

Click to expand...

And, what happens if the SDIRA LLC has unrelated business income and
has to
pay taxes? Does the SDIRA LLC file a tax return and pay the taxes
directly
to the IRS?

Click to expand...

I know this is a lot to ask about. And, yes, I will be getting a
professional to help me. But any feedback in the meantime would be
appreciated.

What State are you in? I am in NJ. I still have not found a New Jersey
accountant to use who knows about Self-Directed IRA's, Self-Directed IRA
LLC's, and real estate investments in the name of the Self-Directed IRA LLC.

I did my own formation documents etc. and I am trying to remember exactly
where I found them. I bought one or maybe two low-cost sample
Self-Directed IRA and Self-Directed IRA LLC sample document packages online.
I bought one through Ebay, recevived it, thought it was worthwhile, and
later received a message from Ebay that they were no longer permitting that
advertiser on Ebay -- I am not sure why. I'll try to do a little more
digging to see if I can find where I got the other sample documents, and
I'll post that if I can find it.

I know that the documents I ended up using were my own hybrid creation which
came from general information I learned about the topic, information I
purchased when viewing and purchasing sample documents, etc. It was a lot
of work and I don't recommend that most people try to do this on their own.

I think I can find the Self-Directed IRA LLC Operating Agreement that I
eventually put together and used, and also the Subscription Agreement that I
put together and used when getting my custodian to purchase units in the
Self-Directed IRA LLC that I set up. I don't know how good they are or if
they are fully correct. I don't want to post them here, but if I could
figure out a way to send them to you, I may be able to block out the names
etc. and forward a sample of what I did.

There was a minor glitch or confusion in the ordering process when I
oredered it over a year ago. I was supposed to tell them the name of the
State where I was going to form my IRA LLC, but I don't think they asked for
that anywhere in the ordering process. So, after a few days, I received an
email from them telling me that I need to specify the State. That delayed
my order by a few days which was a disappointment. But the CD did arrive a
few days after that. Maybe they fixed that in the ordering process since
then. I did send them an email letting them know about the glitch in the
ordering process. If they didn't fix that, I guess the alternative would be
to place the order and then send a separate email telling them the State
where the IRA LLC will be formed.

There was a minor glitch or confusion in the ordering process when I
oredered it over a year ago. I was supposed to tell them the name of the
State where I was going to form my IRA LLC, but I don't think they asked for
that anywhere in the ordering process. So, after a few days, I received an
email from them telling me that I need to specify the State. That delayed
my order by a few days which was a disappointment. But the CD did arrive a
few days after that. Maybe they fixed that in the ordering process since
then. I did send them an email letting them know about the glitch in the
ordering process. If they didn't fix that, I guess the alternative would be
to place the order and then send a separate email telling them the State
where the IRA LLC will be formed.

Click to expand...

I went to this website but they are now under construction. I think I
understand the process to set this up but I'm looking for sample
Operating Agreements. Would you be willing to sell or share the
templates you have for the operating agreements. YOu can respond
directly . Thanks

I went to this website but they are now under construction. I think I
understand the process to set this up but I'm looking for sample
Operating Agreements. Would you be willing to sell or share the
templates you have for the operating agreements. YOu can respond
directly . Thanks

Click to expand...

DO YOU HAVE A SAMPLE AGREEMENT YOU WOULD SHARE. The link you provided
is a website that doesn't exist any longer. I went there about 3
weeks ago and the website was up but it would not allow me to purchase
their software. This week the website doesn't even exist. please
email me directly,

I'm currently setting up one for my wife. But now the custodian wants a
self-directed IRA sepcific LLC operating agreement. This was not the
case
three years ago. Are you willing to share where you found the sample
LLC
agreemnet for self-directed IRA? I would be willing to share all my
docs
as well. I'm looking for someone to bounce ideas. Thanks.

Hi , Thank you for the opportunity to post here and connect with the beautiful and helpful people here. I recently just got some knowledge about Self Directed IRA so I am really excited about it. I have little money so I cant afford to pay for LLC cost. I would be thankful if anyone can help by providing me a boiler plate copy that I can use? I just need the languages required by IRS. If you have the multimember the better as I have to put money together with a few people to afford any investments.
I really appreciate any help by those who are familiar with this paperwork (IRA or Roth IRA LLC operating agreement requirement. I am also aware I need to revise this specific to my business.

I recently opened a Self-Directed Traditional IRA account at a custodian
trust company in the mid-west, and I am in the process of having my IRA
funds from elsewhere rolled over into my Self-Directed IRA.

Then, I formed a Self-Directed IRA LLC (SDIRA LLC) a few days ago by doing
the LLC filing with the State, and I created the Operating Agreement from
samples I obtained which have the correct language regarding prohibited
transactions, etc.

The SDIRA LLC is a single-member LLC with the sole member being my
Self-Directed IRA ("XYZ Trust, custodian FBO John Q. Me IRA"). I, John Q.
Me, am the Manager of the SDIRA LLC but I am not a member.

Here's where I got lost: I needed to get an EIN from the IRS so I can open
the SDIRA LLC bank account. The IRS online Form SS-4 application is
confusing. I finally ended up just doing what I thought was best and filled
it out as a single-member LLC with the single member being XYZ Trust (on
Line 7a) and I used XYZ Trust's EIN (on Line 7b).

Did I do that correctly?

I had to do this in a hurry because I am buying a rental property in the
name of the SDIRA LLC and I needed to get everything set up now in order to
do the Agreement of Sale for the seller to sign (it's a private deal -- no
realtors are involved). I definitely am looking to find a CPA in my area
who knows about self-directed IRA's and self-directed IRA LLC's, how they
are handled taxwise, and can help me set everything up in QuickBooks for the
rental property, etc. (I am in Camden County, New Jersey in case anyone
knows a CPA they could suggest). Until I get the real help that I need with
this, I am trying a little more information about how the SDIRA LLC taxes
will be handled, etc.

As a single-member LLC, the SDIRA LLC is apparently considered to be a
disregarded entity. But, can the SDIRA LLC prepare an informational tax
return showing income, expenses, profits, losses, etc. If so, is it a
return that is done solely with the EIN that the IRS issued to the SDIRA
LLC?

And, what happens if the SDIRA LLC has unrelated business income and has to
pay taxes? Does the SDIRA LLC file a tax return and pay the taxes directly
to the IRS?

I know this is a lot to ask about. And, yes, I will be getting a
professional to help me. But any feedback in the meantime would be
appreciated.

Thanks.

Click to expand...

If your IRA owns a Single Member LLC, then the manager usually does not have to file a Federal Tax Return for the entity. If fact if they do, it will probably result in a letter telling them not to. Earnings for the entity are generally passed through to the owner of the LLC and are reportable through to the owner’s return.

In the case of an IRA owner, most people think the IRA is tax exempt, so nothing needs to be done. THAT IS NOT THE CASE!!!

Commonly referred to as Checkbook IRAs or IRA-LLC’s, even without a formal Federal tax return requirement, the manager of the IRA owned entity still needs to provide the owner with details about what transactions are passing through. Depending on the type of income and/or losses passed through, the IRA itself may need to file a tax return. If it does then the IRA will have to get its own tax return.

Items such as net operating income, profits from debt financed investments, and rental income from personal property will potentially result in the IRA having a tax filing obligation. Even when there is not a tax due, it can be beneficial to file to claim tax losses for the year.

Check with the manager of your IRA owned entity to make sure they are reporting all the info needed to determine if the IRA has a filing requirement. Then make sure your have the appropriate tax filing prepared for your IRA.

Note also, that even though the LLC may not have a federal filing requirement, State laws may require annual reporting for by the entity itself.

Welcome to Accountant Forums!

Welcome to the Accountant Forums, full of expert advice for accounting related topics.

Please join our friendly community by clicking the button below - it only takes a few seconds and is totally free. You'll be able to ask questions about accountancy, tax and audit or chat with the community and help others.
Ask a Question

Useful Searches

We are a forum for professional accountants and tax advisers to discuss accountancy and taxation, but we also welcome individuals and business users who have queries relating to these matters. More About Us...